![]() ![]() If you don’t want burial insurance or to pay directly to a funeral home in advance, you can set up a separate funeral fund that your loved ones can access at the time of your death. You can directly make a prepayment, or advance payment, to a funeral home for prepaid funeral plans, either in full or in monthly installments. Also known as final expense insurance, burial insurance helps cover the costs of a person’s death, particularly funeral arrangements, burial costs, medical bills, outstanding debts, etc., by paying monthly premiums that can be claimed by the beneficiary upon a person’s death. However, there are certain things you can do to help you ease the burden of funeral expenses, such as: Bleeding out cash for an unforeseen event like a funeral is most likely to hurt your savings and emergency fund. The fact of the matter is that funeral expenses are very expensive, whether they are deductible or not. The deductibility of funeral expenses is a part of the tax relief offered by the IRS to the taxes to be paid by the deceased and his or her estate, thereby the rationale why only the deceased person’s estate is the only entity that can claim funeral expenses as tax deductions. ![]() The reason why this is only tax-deductible to the estate, and not for individuals, is because an estate pays for estate tax in excess of the threshold set by the IRS ($12.92 million in 2023), while an ordinary individual does not pay these estate taxes. It's important to remember that funeral expenses are tax-deductible items specific to the estate (gross value of the properties) of a deceased person. Simply put, individuals cannot claim tax deductions on funeral expenses paid out of their own pocket, and only the deceased's estate can benefit from the allowable tax deductions on funeral expenses. Instead of an individual, only funeral expenses paid out of the estate (the funeral costs are paid by the estate of the decedent, and not just any single individual) are instead tax-deductible against the decedent’s gross estate to determine the net taxable estate and corresponding estate taxes, subject to a threshold. Who can and cannot deduct funeral expenses?Īn individual person who shoulders full or part of a deceased person’s funeral expenses cannot claim funeral or burial expenses on their individual itemized deductions as part of Schedule A of Form 1040, according to the IRS. This is why it is not surprising that it is often asked whether individuals can include funeral expenses paid in their itemized deductions to reduce their annual tax burden. Without burial insurance, loved ones left behind are burdened with paying for these costs. The skyrocketing prices of funeral expenses have pushed many people to consider the cost of burial insurance to cover funeral and cremation expenses in the event of an untimely death. ![]()
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